The route to retirement is set to be a “unconventional” one for millennials, according to new research from Aegon.
People in their 20s expect to spend much shorter periods of time working for a single employer than previous generations, with over half (52%) saying they expect to work in one place for between one to five years. In comparison, half of people in their 60s have spent over 20 years with the same employer.
Meanwhile, 20-somethings anticipate that just over a third (37%) of their retirement income will come from their state pension and 32% from their workplace pension. Almost a third (31%) expect their retirement to be funded from their own savings and investments, compared to just 22% of those in their 40s.
Aegon warned that workers in their 20s and 30s also underestimate how long they’ll live for by an average 12 years, meaning they’ll spend longer in retirement than expected.
Kate Smith, head of pensions, Aegon, said: “Despite retirement not being on the horizon for at least 40 years, we can already see that the route to retiring will be unconventional for workers in their 20s. While they are facing the challenges with resilience, already beginning to imagine retirement and look at their savings needs for a far-off event, awareness and action are two different beasts. Successful retirement outcomes need planning and some nudges to help them achieve that.
“Our research tells us that this group acknowledges that it is their responsibility to plan for retirement, so lack of awareness isn’t the issue. It’s likely that more immediate priorities take precedence, such as getting a foot on the housing ladder.
“For younger workers the concepts of aging and retirement can understandably feel abstract or distant, leaving them unsure what steps to take. Underestimating their life expectancy also means they’ll need to fund a longer retirement than anticipated.”
